Popular Vehicles and Services Limited — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

Popular Vehicles reported a strong Q3 FY26, with significant revenue and EBITDA growth driven by robust new vehicle volumes across PV and CV segments, benefiting from GST reforms and improved customer sentiment. However, gross profit margins saw a decline due to a shift in product mix towards lower-margin vehicles and a temporary dip in service volumes. The company is strategically expanding its OEM partnerships and digital presence, while managing inventory effectively and guiding for a return to FY24 PAT levels and 5% EBITDA margins by FY27.

Highlights

  • Total income for Q3 FY26 grew 30.9% YoY to ₹1,791.8 crores from ₹1,368.6 crores in Q3 FY25, indicating strong demand recovery.

  • EBITDA for Q3 FY26 increased 68.5% YoY to ₹58.2 crores from ₹34.6 crores in Q3 FY25, with margins at 3.3%, reflecting improved operating leverage.

  • New vehicle volumes for Q3 FY26 increased 44% YoY to 16,023 units, driven by robust growth in entry-level PV (35%+ YoY) and CV (52%+ YoY) segments following GST reforms.

  • New vehicle inventory reduced significantly to 19 days, and overall inventory to 21 days, supporting lower discounting and improved working capital management.

  • Strategic expansion with the addition of an Audi dealership, BKT distributorship, and the launch of ZPAREX e-commerce platform diversifies revenue streams and strengthens omnichannel presence.

Concerns

  • Service business topline increased marginally by 1% YoY, with service volumes down 19% YoY in Q3 FY26, partly due to a strategic reduction in low-value campaigns.

  • Gross Profit margin declined to 12.7% in Q3 FY26 from historical 14.5%-15% levels, attributed to a shift in product mix towards lower-margin smaller vehicles and commercial vehicles.

  • Nine-month FY26 PAT was a loss of ₹7.5 crores, compared to a profit of ₹3.3 crores in 9M FY25, impacted by acquisition-linked depreciation and new Labor Code costs.

  • Maruti supply shortages for certain models in Jan-Feb 2026 led to lost sales, indicating demand outstripping supply for popular segments.

Key financials

2 periods

Q3 FY26

  • Total Income
    ₹1,791.8 Cr
    YoY +30.9% QoQ +16.8%
  • EBITDA
    ₹58.2 Cr
    YoY +68.5% QoQ +17.8%
  • EBITDA Margin
    3.3%
  • PAT
    ₹0.7 Cr

9M FY26

  • Total Income
    ₹4,642.3 Cr
    YoY +10.9%
  • EBITDA
    ₹145.9 Cr
    YoY +0.2%
  • EBITDA Margin
    3.1%
  • PAT
    ₹-7.5 Cr

What they filed

Q1 FY27: revenue up 71.8%, net profit up 56.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue763 645 588 536 707 −7%875 +36%730 +24%922 +72%
EBITDA22 4 -5 4 17 −22%23 +436%13 +370%25 +457%
Net profit3 -13 -23 -15 -7 −316%-12 +8%-17 +27%-7 +56%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Total Income (Q3 FY26)
₹1,387 Cr Total
  • Passenger Vehicles ₹749 Cr 54.0%
  • Commercial Vehicles ₹604 Cr 43.5%
  • EV ₹34 Cr 2.5%

Capital allocation

high confidence
  • Debt Gross ₹655 Cr
    Abraham Mammen: "So to start on the debt position that we are looking at, the approximate debt that we have in the balance sheet at this point of time is close to around, total borrowings being around Rs. 655 crores." and Naveen Philip: "No, not Rs. 650. Rs. 550 crores in terms of working capital debt, which is the same as FY '25. So I mean a rough scan would be in terms of Rs. 6,600 crores we would, if you look at 12 months, one month inventory is about Rs. 500 crores. But we would be close to that. In fact, it will be slightly lower in terms of inventory on that, closing inventory."
  • M&A Audi Dealership (Telangana & Andhra Pradesh) Acquisition · Closed

    Strengthened luxury portfolio and beginning of a new OEM relationship with a leading premium automobile manufacturer.

    Initially negative margins for the first 6 months, service margins similar to JLR.

    Naveen Philip: "During this period, we strengthened our luxury portfolio with the addition of an Audi dealership, acquiring an existing Audi dealership covering Telangana and Andhra Pradesh. This marks the beginning of a new OEM relationship with one of the world's leading premium automobile manufacturers."
  • M&A Balkrishna Industries Limited (BKT) Distributorship Acquisition · Signed

    Important expansion of spare parts business and provides an additional growth avenue beyond vehicle retailing.

    Naveen Philip: "In addition, we entered into an agreement to become the authorized distributor for Balkrishna Industries Limited, (BKT) in Kerala and Karnataka, covering the two-wheeler and passenger car radial segments which they are just entering into."
  • M&A ZPAREX Digisolutions Private Limited Acquisition · Announced

    Established an e-commerce platform for spare parts and accessories, strengthening omnichannel presence.

    Naveen Philip: "We also established ZPAREX Digisolutions Private Limited, an e-commerce platform for spare parts and accessories, as a step-down subsidiary under our wholly-owned subsidiary, Popular Mega Motors."

Guidance & targets

Profitability

  • EBITDA margin Profitability · FY27 · High confidence 5% range
    Accordingly, we expect EBITDA margins to normalize towards 5% range in FY '27 as scale begins to kick in.

    — Naveen Philip

  • PAT Profitability · FY27 · High confidence approaching FY24 levels (₹76 crores)
    In terms of the profit margins and the profit, we have given a guidance that FY '27, we should close at least as much as FY '24, which is about Rs. 76 crores PAT.

    — Naveen Philip

  • EBITDA (overall) Profitability · FY26 · High confidence 3.5%

    Previously 4% → 3.5%

    We had earlier given a guidance of 4%, but we are not able to achieve that. We would probably be ending up FY '26 with about 3.5% in terms of EBITDA numbers, so 3.5%.

    — Naveen Philip

  • Gross Profit margin Profitability · Q1, Q2 (FY27) · Medium confidence 13%+, then 14%-15%
    Indicatively, yes, we should get in excess of 13% going forward and then get back to the normal levels that we had at the IPO levels at 14%-15%, probably in Q1, Q2.

    — Abraham Mammen

Revenue

  • Topline growth Revenue · FY27 · High confidence high double-digit
    With continued emphasis on internal efficiency improvements, we expect these initiatives to translate into high double-digit topline growth in FY '27, with an EBITDA margin target of 5% and PAT approaching FY '24 levels.

    — Naveen Philip

Service

  • Service ASP increase Service · FY27 · High confidence 8%-10%
    Which is why I said for the full year of FY '27, we should have an ASP increase of about 8%-10% at least in terms of service and increase the volume also by about 7%-8%.

    — Naveen Philip

  • Service volume growth Service · FY27 · High confidence 7%-8%
    Yes. That is why we are saying that we will have at least about 7%-8% growth in terms of service, both in terms of the organic growth and whatever the acquisition that we have done.

    — Naveen Philip

Growth

  • Overall growth Growth · FY26 · High confidence mid-teens

    Previously single-digit → mid-teens

    We expect Q4 FY '26 to outperform Q3 FY '26, enabling FY '26 to close with mid-teens growth vis-a-vis FY '25, compared to our initial expectation of a single-digit growth.

    — Naveen Philip

Inventory

  • Working capital debt Inventory · March 2026 · High confidence ₹550 crores
    No, not Rs. 650. Rs. 550 crores in terms of working capital debt, which is the same as FY '25.

    — Naveen Philip

New Business

  • ZPAREX business kick-off New Business · Q1 FY27 · High confidence Q1 FY27
    We have not yet started business. We would probably kick off business in Q1 of FY '27.

    — Naveen Philip

Operational Efficiency

  • Back office centralization completion Operational Efficiency · Q1 FY27 · High confidence April or May (early Q1 FY27)
    So that we said we have started that now in Feb. Should be able to close it by about April or May. So early Q1, we should be able to kick start that.

    — Raj Narayan

Volume

  • Acquisition-led volume growth Volume · FY27 · High confidence 9,000 odd vehicles
    So overall, as I said, just from the acquisition that we have done, we should be close to about 9,000 odd vehicles in terms of growth.

    — Naveen Philip

  • Total vehicles sold Volume · FY26 · High confidence 45,000 vehicles
    This year, we would close at around 45,000 vehicles.

    — Naveen Philip

  • Overall volume growth Volume · FY27 · High confidence 20%
    So closer to about 20% growth is what we are targeting.

    — Naveen Philip

EV Penetration

  • 4-wheeler EV penetration (Government guideline) EV Penetration · 2030 · High confidence 30%
    Government is about 30% by 2030.

    — Naveen Philip

Market context

  • Service volume growth Volume · FY27 · High confidence double-digit
    While revenue remains relatively stable due to higher-value services, we expect double-digit service volume growth from FY '27.

    — Naveen Philip

  • PAT Profitability · Q4 FY26 · High confidence positive
    In terms of overall profitability for Q4, we intend to be profitable in Q4, overall, and have FY '26 at a positive note, including the IndAS effect, the cess impact and all that.

    — Naveen Philip

  • PAT Profitability · FY27 · High confidence positive
    And Q4 and FY '27 both would be PAT positive for the company as well?

    — Naveen Philip

What to watch in Q4 FY26

Service business volume growth

FY27 onwards
Current down 19% YoY in Q3 FY26
Target double-digit growth from FY27, 7-8% volume growth

Why it matters

To confirm the recovery and contribution from the high-margin service segment after strategic adjustments.

By end of FY '26, we would look at a flat over FY '25. But FY '27, we should see an increase of about 10%-12%, including whatever the acquisitions that have already been done, which is in Telangana and Punjab.

Risks & concerns

  • Gross Profit margin compression due to product mix shift

    high

    GP margin declined to 12.7% in Q3 FY26 from historical 14.5%-15% levels, attributed to increased sales of lower-margin smaller vehicles, commercial vehicles, and Ather, as well as acquisition-related margin erosion.

    Management acknowledged, explained reasons

  • Softness and volume degrowth in service business

    medium

    Service topline increased marginally by 1% YoY, but service volumes were down 19% YoY in Q3 FY26, partly due to the lag effect of lower new vehicle sales and a strategic reduction in low-value campaigns.

    Management acknowledged, explained strategy

  • Near-term pressure on margins from acquisitions and organic network expansion

    medium

    The acquisitions completed during 9M FY26, along with ongoing organic network expansion, will have a near-term impact on cost structure and may exert some pressure on margins, with full revenue benefits expected from FY27.

    Management acknowledged

  • Standalone loss due to acquisition-linked depreciation and new Labor Code

    medium

    The standalone loss for PVSL was primarily due to the IndAS and depreciation impact of approximately ₹8 crores from the Telangana acquisition and ₹1.6 crores due to the new Labor Code.

    Management acknowledged, explained

  • Maruti supply shortage impacting sales

    medium

    Popular Vehicles experienced lost sales in January and February due to non-availability of vehicles from Maruti, as demand for certain models (e.g., S-presso, Baleno, Fronx) outstripped supply.

    Management acknowledged

  • Temporary impact on luxury car volumes due to cyberattack

    low

    Luxury car volumes (JLR) were temporarily impacted due to a cyberattack at one OEM partner, though the issue has been fully resolved with pickup expected from Q4.

    Management acknowledged

Q&A highlights

8 direct
Debt and Inventory Levels Direct
So to start on the debt position that we are looking at, the approximate debt that we have in the balance sheet at this point of time is close to around, total borrowings being around Rs. 655 crores. ... The inventory levels that we are really looking at is close to around 21 days in terms of the inventory, and that is the total inventory across the organization, while the new vehicle's inventory has come down to close to around 18-19 days.

Clarifies the current debt position and significant reduction in inventory days, which impacts working capital and interest costs.

Asked by Preet Pitani

Gross Profit Margin Degrowth Direct
And from the previous conversations that we had at Naveen's presentation, there has been a change in the revenue mix that has happened, both for the Maruti. As the GST cuts happened, it encouraged the smaller car sales, so the volume in the smaller cars has actually increased, which comes at a lower margin. That is for the Maruti standalone. When we look at the second part, we also spoke about the Commercial Vehicle business and the Ather businesses have actually outgrown in terms of the total numbers.

Explains the reasons for the decline in gross profit margins, linking it to product mix shifts towards lower-margin segments and acquisitions.

Asked by Nilesh Doshi

Profitability Outlook and Employee Cost Direct
In terms of the profit margins and the profit, we have given a guidance that FY '27, we should close at least as much as FY '24, which is about Rs. 76 crores PAT.

Directly addresses analyst concerns about falling profits and provides a clear target for PAT recovery by FY27.

Asked by Nilesh Doshi

Service Business Performance and Strategy Direct
Earlier, we used to do these campaigns with the service thing in terms of getting campaign numbers, monsoon campaigns, and various other winter campaigns, whatever. We used to drive campaigns to summer campaigns, to have AC checkup, to have Wi-Fi checkup, etc. Over this year, we have said that wherever the job card numbers are lower than about Rs. 500 or Rs. 1,000 in terms of job card billing, that didn't make sense occupying our manpower into that. So we actually reduced these campaigns. So that is one of the reasons why you see the volume dip, whereas the ASP going up by a much larger number.

Clarifies the strategic shift in the service business, explaining the volume degrowth but also the increase in ASP and future growth expectations.

Asked by Nilesh Doshi

Maruti Supply Shortage Direct
From Maruti side, it could be because in terms of the vehicles that we have asked for, we have still not got in terms of Jan. So we in fact, we had a loss of sales in Jan because of non- availability of vehicles, which is continuing in Feb also. So the overall numbers are higher than the previous year.

Reveals that Popular Vehicles is experiencing supply shortages from Maruti, leading to lost sales despite strong demand, impacting near-term volumes.

Asked by Preet Pitani

Acquisition-led Volume Buildup Direct
So overall, as I said, just from the acquisition that we have done, we should be close to about 9,000 odd vehicles in terms of growth. This year, we would close at around 45,000 vehicles. So that would be a 20% growth in terms of just the acquisitions turning up.

Quantifies the expected volume contribution from recent acquisitions and sets an overall growth target for FY27, providing clarity on M&A impact.

Asked by Shirish Pardeshi

EV Transition Strategy Direct
In terms of training for all our people, in terms of the e Vitara service, that is already being done. Even in Jaguar Land Rover, when they launched the I-PACE, which is an electric vehicle that was also done in terms of the entire Jaguar Land Rover service team. So that training continuously goes on. In terms of preparedness of roadmap, if you look and we sell Ather vehicles, which is fully EVs. And we are servicing close to about 4,000 vehicles a month in terms of Ather EVs.

Addresses the long-term strategic question of EV transition, highlighting existing capabilities, training, and market outlook.

Asked by Jerald James

Banyan Tree Director Resignation Direct
So Banyan Tree is a private equity investor. So he was a Nominee Director from Banyan Tree. So, Banyan Tree has been on our board from 2018 onwards. So when we did the IPO in 2024, at that point of time, they wanted to exit the board, but we wanted their guidance over the next few years.

Clarifies the context behind a director's resignation, indicating it was a planned exit by a PE investor rather than a negative event for the company.

Asked by Rohan Dedhia

2 min read 6 chapters

Detailed narrative

Q3 FY26 Performance Highlights and Demand Recovery

Popular Vehicles reported Q3 FY26 as its strongest performing quarter in 1.5 years, with total income growing 30.9% YoY to ₹1,791.8 crores. This was driven by a 44% YoY increase in new vehicle volumes to 16,023 units, benefiting from improved customer sentiment post-GST reforms. Entry-level passenger vehicle volumes surged over 35% YoY, and the commercial vehicle segment saw volumes grow over 52% YoY, indicating a broad-based demand recovery.

Strategic Expansion and Diversification

The company continued its strategic diversification by acquiring an Audi dealership in Telangana and Andhra Pradesh, marking a new OEM relationship. It also entered an agreement to distribute Balkrishna Industries Limited (BKT) products in Kerala and Karnataka, expanding its spare parts business. Furthermore, Popular Vehicles established ZPAREX Digisolutions Private Limited, an e-commerce platform for spare parts and accessories, which is expected to kick off business in Q1 FY27.

Margin Dynamics and Profitability Outlook

EBITDA for Q3 FY26 increased 68.5% YoY to ₹58.2 crores, with margins at 3.3%. However, gross profit margins declined to 12.7% from historical 14.5%-15% levels, primarily due to a shift in product mix towards lower-margin smaller vehicles, commercial vehicles, and Ather EVs. Management guided for EBITDA margins to normalize towards a 5% range and PAT to approach FY24 levels (₹76 crores) by FY27, with Q4 FY26 and FY27 expected to be PAT positive.

Inventory Management and Debt Position

Popular Vehicles demonstrated improved inventory management, with new vehicle inventory reduced to 19 days and overall inventory to 21 days. This reduction is expected to lead to lower discounting and reduced interest costs in future quarters. Total borrowings stood at approximately ₹655 crores, including ₹80 crores in term loans for acquisitions, with working capital debt expected to remain around ₹550 crores by March 2026, similar to FY25 levels.

Service Business Evolution

The service business experienced some softness, with topline marginally up 1% YoY and volumes down 19% YoY in Q3 FY26. This was attributed to the lag effect of lower new vehicle sales in prior periods and a strategic decision to reduce low-value campaigns. Despite this, the average selling price (ASP) for service increased by 17%-18% YoY in Q3. Management expects double-digit service volume growth and an 8%-10% ASP increase from FY27, driven by recent acquisitions and organic growth.

Operational Efficiency Initiatives and EV Readiness

The company is implementing operational efficiency initiatives, including centralizing its back office, which is expected to be completed by early Q1 FY27, aiming for annualized savings of approximately ₹1.5 crore. Regarding EV transition, Popular Vehicles highlighted its experience servicing Ather EVs (4,000 vehicles/month) and confirmed that all service centers and most Nexa showrooms are equipped with charging infrastructure, positioning it for the government's target of 30% EV penetration by 2030.

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